New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved one-time budgetary support of Rs 10,000 crore for Oil Marketing Companies (OMCs) to provide ATF price stabilisation support to Scheduled Indian Airlines for their domestic and international operations amid the West Asia crisis.
The budgetary support will be in the form of interest-free advances to OMCs through the Demands for Grants of the Ministry of Petroleum and Natural Gas. It will shield OMCs from losses arising from volatile and elevated ATF prices during the ongoing West Asia crisis.
ATF price stabilisation support will be in force for a period of 36 months with provision for annual review or until the advance amount is fully recovered/settled, whichever is earlier.
The support will be provided to OMCs to facilitate stable ATF pricing for airlines during the ongoing period of exceptional fuel price volatility arising from the West Asia crisis, according to an official statement.
“A one-time budgetary support of up to Rs 10,000 crore shall be provided as an interest-free advance to OMCs to support ATF price stabilisation for Scheduled Indian Airlines. The corpus shall compensate OMCs for losses arising from elevated international ATF prices whenever the prevailing Import Parity Price exceeds the benchmark price determined under the approved mechanism,” according to the Cabinet note.
Moreover, when international ATF prices moderate, the differential amount will be recovered from OMCs and returned to the Consolidated Fund of India.
The arrangement will continue until the entire support amount is fully recovered and settled.
The scheme will be available to all willing scheduled Indian carriers for both domestic and international operations. The mechanism provides greater predictability in fuel costs by adopting a fixed-price arrangement for domestic and international operations, thereby reducing airlines’ exposure to sudden fuel price spikes.
The arrangement will be implemented through an MoU between participating Indian airlines and OMCs, with the Ministry of Civil Aviation and the Ministry of Petroleum and Natural Gas as signatories, according to the statement.
Under this one-time arrangement, participating airlines will procure ATF only from OMCs for up to three years, subject to annual review or until the advance amount is fully recovered, whichever is earlier.
The proposed mechanism will provide enhanced stability and predictability in ATF pricing for Indian airlines, enabling better operational and financial planning. The measure will have positive spill-over effects on tourism, hospitality, trade, exports, regional development, and investment.
Due to the ongoing West Asia crisis, international ATF prices have surged nearly 2.5 times from Rs 60.50 per litre in March 2026 to Rs 142 per litre in May 2026.
(IANS)
